The Team Leasing simple guide to leasing and finance
While you get the same dedicated service and great rates with every Team Leasing product, there are some simple and basic differences between them. Please invest a few minutes here and follow the links below for a simple guide to leasing and finance from Team Leasing. You can also apply now for a great deal on leasing and finance from Team Leasing or contact us online or call us on 1300 798 977 and learn how we can help your business grow.
Team Leasing Equipment Leases
Equipment leases are classified as either a finance lease or an operating lease. The terms operating and finance lease are related to accounting definitions - more specifically financial reporting. Other important non-lease finance arrangements such as hire purchase agreements and chattel mortgages are also explained below.
It’s really pretty simple. The Australian Accounting Standards Board (AASB) classification of a lease depends upon whether the customer is just using the equipment or is purchasing the equipment.
Team Leasing Finance Lease
If the substance of the transaction is a purchase of equipment in the guise of a lease, then it’s called a finance lease. If your business or customer will:
- Most likely own the equipment
- Use it for most of its useful life
- Pay a significant portion of the equipment cost during the term
Then it is a finance lease and both the asset and the liability are detailed on the balance sheet. A finance lease is almost the same as a purchase (you are simply defraying the cost over time).
If you want to manage your capital better with a Team Leasing Finance Lease, click here.
Team Leasing Operating Lease
If your business or customer is only going to use the equipment, the transaction is considered an operating lease. An operating lease is referred to as an off balance sheet lease because the business does not show either an asset or a liability on its books. The equipment must have significant value and reasonable use left when it is returned to Team Leasing. If your business or customer wants to:
- Use equipment without taking ownership
- Only pay part of the original equipment cost
- Keep the lease off their balance sheet
Then it is an operating lease
If you want to reduce your Total Cost of Ownership with a Team Leasing Operating Lease, click here.
Team Leasing Chattel Mortgage
A chattel mortgage is different to a lease, because it is lending money, while a lease is lending equipment. With a chattel mortgage, your business or customer takes ownership of the equipment on day one. By comparison, with a lease your business or customer takes ownership only when and if they exercise the purchase option.
If you’d like to know more about how a Team Leasing Chattel Mortgage can help small to medium sized businesses, click here.
Team Leasing Commercial Hire Purchase
Under a Commercial Hire Purchase, you or your customer obtain goods by hiring them over the term. The title transfers to you after the last payment, so unlike a chattel mortgage, you do not become the owner of the equipment until all payments are made under a Commercial Hire Purchase agreement.
If you’d like to know more about the flexibility and tax benefits of a Team Leasing Commercial Hire Purchase, click here.